Concord City Council to vote on buying New Hampshire Employment Security building

Without a developer to take over the New Hampshire Employment Security site this spring, Concord has stepped closer to snatching up the property itself.

In a nonpublic session Monday, the city council decided to hear feedback from the public next month on what to do with the soon-to-be vacant building. On the table is a resolution to buy it for $1.9 million, which will come up for a vote in June.

Buying the property at 32-34 S. Main St. would allow the city to control who develops that lot later, said Matt Walsh, director of redevelopment, downtown services and special projects.

“Essentially, the property is important from an economic development perspective,” Walsh said.

“In discussions with the city council, we felt it was important for the city to take ownership of the property on an interim basis in order to direct what the final development of the property will be in the next few years.”

An “interim” basis could mean about five years, Walsh said.

The councilors will also hear public comment on whether to leave the state building standing or demolish it, at a cost of $190,000 or $325,000, respectively. If the council votes in favor of buying the property, the sale could close by September.

The money to buy and maintain the 0.74-acre Employment Security property would come from the Sears Block Tax Increment Finance District, a special tax district in the South End. In that district, tax revenue from nearby developments such as the Smile building or the Capitol Commons building is reinvested in new projects in that area.

To protect certain lots, the city has also purchased sites such as the Allied Leather Tannery site in Penacook, which is still vacant, and the site later redeveloped as the Capitol Commons building downtown.

Mayor Jim Bouley said he is looking forward to hearing what the public wants to happen.

“I don’t think there is a specific course of action that really has been determined. . . . We’re looking for public input,” Bouley said.

If the council does not agree to buy the property, the state could sell it on the open market.

“One of the key important pieces to this particular property when you look at the options, we have the state do whatever they wish with it or the city being involved to hopefully find an appropriate developer,” Bouley said.

“What I mean by appropriate is someone who’s going to pay taxes.”

Councilor Allen Bennett, who represents Ward 6 and the South End, agreed the development should add to the tax base.

“I think the people would like to see a nice commercial development, something that would draw people into the South End and into that neighborhood,” Bennett said. “And something that pays, something that pays property taxes.”

A change of plans

Buying the Employment Security site was not the city’s first choice.

“In a perfect world, it would have been easier for a private developer to simply come in and buy the property right away,” Walsh said.

Two developers were interested in the site last year, but the city council formally rejected both last month. Both John Illick, a Vermont developer and head of ReArch Co., and Concord developer Steve Duprey had submitted plans last May for a mixed-use space downtown. Their proposals, which were confidential during negotiations, are now public.

The city had initially been drawn to Illick’s plan to buy the whole block and raze the old buildings. In their place would be a 246,000-square-foot building for retail, a hotel, market-rate apartments, a penthouse restaurant and a public library to cost more than $12 million, according to his proposal.

“We were told we were unanimously selected by the city council to move forward with our development proposal,” Illick said.

Once negotiations began, Illick said the deal didn’t come together.

The ReArch plan was “a very ambitious redevelopment proposal,” Walsh said, and the proposal states the building might not be ready for three or more years. It was also very expensive, because Illick wanted the city to pay for a two-story parking garage underneath his new building. His proposal lists the hard cost of the garage at more than $10 million.

“Essentially, the city ended up backing away from that project because of the amount of financial (assistance) that project was going to require from the city,” Walsh said.

The city ended negotiations with Illick and his team in November, Walsh said.

Concord “certainly put in a good effort to find a developer,” Illick said. “I think they might have done a little more financial analysis going into it maybe than they did. It wasn’t a disingenuous effort (by the city), and it wasn’t a small effort. It just didn’t work out.”

Another dead end

The city then turned to Duprey, who submitted his proposal with developer Jon Chorlian, Seacoast developer Eric Chinburg and Company C President Walter Chapin.

The team outlined several options for the Employment Security site, but they all centered around Company C, a home decor design studio that would have anchored the development. Duprey also proposed market-rate apartments for the site, as well a public library that could cost the city between $9 million and $13 million, and he had considered rehabbing the existing building instead of knocking it down.

But Company C needed to know whether they could move to South Main Street by September, Duprey said.

“Our proposal was contingent on the city being able to select us in a time frame that accommodated Company C’s needs to have some certainty about where they were locating,” Duprey said. “We understand this is a complicated process, but we were not contacted by the city until well beyond our target date of Sept. 15.”

When city officials turned to Duprey in November, he said they were not able to negotiate a deal that could work for Chapin’s company.

“Regrettably, because of the passage of time, Company C had made other arrangements for space,” Duprey said.

Walsh said the city tried to coax the retailer downtown, to no avail.

“I don’t know if that outcome would have been different or not, but we certainly were having conversations with Steve and Company C (before they) had made their decision,” Walsh said.

The retailer instead kept its current spot on Old Turnpike Road in Concord, and Duprey lost the new market tax credits he would have used to pay for the project. If the right tenant comes along, Duprey said he would still hope to develop the property.

“We think it’s an important site, and we know the city is trying to do a good job for all of Concord, and we wish them the best,” Duprey said.

Illick also said he would still be interested in coming to Concord.

“The site is a very attractive one. . . . I wish Concord well, and I would love to be a part of it,” he said.

The Concord City Council will meet again May 12 at 7 p.m. in council chambers.

(Megan Doyle can be reached at 369-3321 or mdoyle@cmonitor.com or on Twitter @megan_e_doyle.)

"Buying the property at 32-34 S. Main St. would allow the city to control who develops that lot later"
Don't we have that control anyway ?

BestPresidentReagan wrote:

04/16/2014

simply NOT a govt job. This democrat ruled city is ill equipped to be a player in real estate investment / development which they have proven over and over. NOR should it be. Govt is in the business of being a referee in life NOT a player